Here’s Why Kroger’s Shares Are Plunging

Inside A Grocery Co. Grocery Store Ahead Of Earns Figures
An employee stocks salad mixes in the produce department of a Kroger supermarket in Peoria, Illinois, U.S., on Tuesday, Sept. 10, 2013. Kroger Co. is scheduled to report quarterly earnings on Thursday, Sept. 12.
Photograph by Daniel Acker — Bloomberg via Getty Images

Kroger reported sales at its supermarkets open at least 15 months rose less than analysts had expected, hurt by the shift of Super Bowl to February and as unseasonably warm weather led to fewer visits.

Shares of the largest U.S. supermarket operator fell about 7% to $37.70 in early trading on Thursday.

Kroger, owner of the Ralphs, Smith’s and Food 4 Less grocery chains, usually benefits from high snowfall and snowstorms as people usually stock up on consumables during such weather.

Super Bowl is “a huge sales week” for the company, Chief Executive Rodney McMullen told CNBC, and the event being held in February this year instead of January, led to lower sales in the fourth quarter ended Jan. 30.

Sales, excluding fuel, at Kroger‘s identical supermarket, a gauge of performance for grocers, rose 3.7% in the quarter. Analysts on average had expected a rise of 4.5%, according to research firm Consensus Metrix.

Warehouse club retailer Costco Wholesale Corp also reported established store sales growth below the average analyst estimate on Wednesday, hurt by lower traffic in January and a strong dollar.

Kroger (KR) said lower inflation would slow its identical supermarket sales growth to 2.5%-to-3.5% for the year ending January 2017 from a 5% growth in the year ended January 2016.

The company’s total sales rose 3.8% to $26.17 billion, but came in below the average analyst estimate of $26.29 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to Kroger rose to $559 million, or 57 cents per share, in the quarter, from $518 million, or 52 cents per share, a year earlier.

Analysts on an average had expected earnings of $0.54 per share.

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